Hindustan Unilever’s market share slips across key categories

Losing lather: The FMCG firm’s market share in the detergents category fell by 2.5% to 35% in the quarter to June compared to the year-ago period even though its Wheel brand dominates the low-priced s

Updated: Thu, Aug 09 2007. 12 08 AM IST

Hindustan Unilever Ltd (HUL), the country’s largest fast moving consumer goods (FMCG) company, is losing market share in most key segments in which it is present.

In the quarter ended June 2007, the FMCG behemoth’s sales grew 13% year-on-year to Rs3,481 crore and net profit 30% to Rs493 crore. Yet, the

Losing lather: The FMCG firm’s market share in the detergents category fell by 2.5% to 35% in the quarter to June compared to the year-ago period even though its Wheel brand dominates the low-priced segment.

company’s market share declined in several categories.

According to the data provided by market research firm ACNielsen, in the quarter ended June 2007, HUL’s soaps business, which accounts for more than a quarter of its total revenues, grew 7%. While the industry grew at 8%, HUL’s closest rival Godrej Consumer Products Ltd’s (GCPL) grew its soaps business by a whopping 24.3%. Though, HUL still dominates the Rs5,500 crore soap market in India with a 53% market share, its share went down by 2.6% in terms of units sold and 2.4% in terms of value over the 15-month period from April 2006 to June 2007. HUL did not respond to an email query from Mint.

“GCPL is emerging as a strong player in the value-for-money products category (products that are not priced too steeply) and it is constantly eating into HUL’s market share - especially its (HUL’s) mass brand Lifebuoy,” said Anand Shah, an analyst at Angel Broking, a Mumbai-based brokerage firm. In the oral care category, HUL is feeling the heat from competitors both at the top and the lower end of the market. The company’s oral care portfolio that includes brands such as Pepsodent and CloseUp, grew at 11% with Pepsodent growing by only 4.5%, according to ACNielsen.

Against this, Colgate-Palmolive (India) Ltd’s Colgate brand grew at 14% and the toothpaste business of Dabur India Ltd, which owns brands such as Babool and Meswak, grew at an impressive 32%.

The primary reason for HUL losing market share, say analysts, is that while the company has a varied brand portfolio, its rivals, big and small, have focused on certain niches and are pushing growth aggressively in these categories. “While the top-end players such as Procter & Gamble or Colgate-Palmolive are getting aggressive in premium categories, mid-rung players such as Dabur, Marico and Godrej are muscling in with their value-for-money strategy,” said an executive with a telecom company, who was until recently at HUL. The executive didn’t want to be identified.

HUL’s market share in the detergents category also fell by 2.5% to 35% in the quarter to June compared to the year-ago period. “HUL’s low-priced brand, Wheel, dominates the laundry segment, but with rising incomes, consumers are now shifting to mid-level brands from rivals such as P&G and Nirma,” said Sameer Deshmukh, analyst, IL&FS Investsmart Securities Ltd.

The company’s skin care business also registered a marginal decline, with its brands such as Fair & Lovely and Ponds losing 0.4% market share in the quarter to June. While announcing its quarterly results, HUL had said that the segment had been impacted by planned reduction of inventory in the distribution pipeline in preparation for a relaunch of Fair & Lovely in July 2007.

In the branded tea segment (a Rs5,000 crore market), Tata Tea Ltd recently displaced HUL from the top slot. HUL’s market share dropped to 18.6% in volume terms while Tata Tea’s was 19.2%. In value terms, however, HUL remains ahead with a 24% market share as against Tata Tea’s share of 21%. “We are focusing on the wallet of the consumers rather than only increasing the volume,” Harish Manwani, chairman, HUL, had said at a recent press meet.